Last Updated on 22/03/2022 by Deepak Singla
Investments form an essential part of personal finance management. 76% of Indian adults do not have proper financial knowledge as per indiatoday.in. That’s not it, you will be shocked to know that only 1.5% to 2% of the Indian population invest in stocks (as per qz.com). which fall under one of the best investment plans with high returns. This is mainly because they are not quite literate when it comes to understanding finance and share market investment plans.
Investments are extremely important when it comes to growing your wealth, securing your future, and your life too. You, most probably, won’t be earning in after retirement. However, you still need to continue living and that is possible only if you save and invest now in the right investment plans for you. Keeping your money idle in a Savings Account is not a good decision and this article will tell you why.
What are investment plans?
Investment plans are financial instruments that help you to accumulate wealth to meet several financial goals and secure your future. There are various investment options out there such as funds, schemes, FDs, RDs, etc. These can help you to save and grow your wealth. Bank Savings Account offer an interest rate of 3% to 4% on an average but there are several investment plans that provide returns in the range of 5% to 12% with the average being at 8% p.a. In addition to that, investing also inculcates financial discipline in you, and this way you will be able to accumulate wealth to meet both your short and long term goals.
Top 10 Best Investment Options in India
Here is the list of Top 10 best investment option in India 2022 with risk, liquidity and Returns
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Best Investment Plans in India 2022
You need to do proper research before purchasing an investment plan in India. Carefully analyze your needs and then analyze the several plans available in the market. Your investment plan should provide you with sustainable returns, capital appreciation, stability, and tax benefits. Given below are some of the best investment options of 2022 categorized as per the risk associated with them. We have included the best investment options for salaried persons and non-salaried people as well.
1. Low-Risk Investments
Low-risk investments are ideal for investors with low-risk tolerance and minimal volatility concerning your investment portfolios.
Low-risk investments include several fixed income instruments such as:
a) Bonds
b) PPF or Public Provident Fund
c) Fixed Deposits (FDs)
d) Government Savings Schemes
e) Debentures
f) Bonds.
These investments don’t follow stock market shifts, instead, these follow the interest rate movements of financiers.
The returns on such investment plans are generally assured and fixed.
Also, you might need to lock-in your investment for the long term to earn high returns on your investment. We have explained some of the low-risk investment plans below:
Public Provident Fund:
Public Provident Fund (PPF) is a government-initiated investment plan that helps its customers take up risk-free investments for the long term. This is one of the best long-term investment plans. The interest rate on PPF is revised every quarter by the Government of India. The ongoing interest rate is 7.9% p.a. The maturity period of a PPF is 15 years but you can withdraw the sum partially after 6 years.
There is no risk associated with the principal sum and the interest you earn on it since this is a Government regulated scheme. Besides, the principal amount, interest earned, and maturity amount will be tax-exempted since PPF falls under the EEE (Exemption Exemption Exemption) category. So, this is one of the best tax-saving investment options out there.
| Minimum Investment Amount | INR 500 |
| Maximum Investment Amount | INR 1.5 lakh |
| Interest Rate | 7.9% p.a. |
| Maturity Period | 15 years |
| Liquidity | Low (Can withdraw the amount partially after 6 years) |
Senior Citizen Savings Scheme:
Senior Citizens Savings Scheme is a 5-year Savings scheme available for Indian Senior Citizens. This scheme is for individuals whose age is more than 60 years. The current interest rate on SCSS is 8.6% p.a. So, you can see for yourself that the interest rate of SCSS is higher than those of most other savings schemes. You can open your SCSS account via Public/ Private sector banks or Indian Post Offices. Also, it is one of the best tax saving investment options besides being the best investment plan for senior citizens.
| Minimum Investment Amount | INR 1000 |
| Maximum Investment Amount | INR 15 lakh |
| Interest Rate | 8.7% |
| Tenure | 5 years |
| Liquidity | Moderate (You have to pay a penalty fee for premature withdrawal) |
National Pension Scheme
NPS is a government-initiated scheme that is managed by the Pension Fund Regulatory and Development Authority. This is a combination of liquid funds, corporate bonds, fixed deposits, government funds, and so on. Currently, the minimal yearly contribution needed to make towards an NPS for a tier-1 account is INR 1,000 which has been reduced from the earlier INR 6,000. This scheme is a long-term investment option and focuses to serve your retirement. This way it has become one of the best investment options for senior citizens.
| Minimum Investment Amount | INR 1,000 |
| Maximum Investment Amount | INR 1.5 lakhs |
| Interest Rate | 8% to 10% |
| Tenure | Till attaining 60 years of age |
| Liquidity | Low |
Pradhan Mantri Vaya Vandan Yojona
Pradhan Mantri Vaya Vandan Yojana is designed especially for senior citizens of age 60 years and above. The interest rate on this scheme is 7.4%. You could opt to receive the interest annually, half-yearly, quarterly, or on monthly basis. This scheme is a sort of pension source for the elderly. Your invested amount can reach a maximum of INR 15 lakh and the investment tenure is 10 years.
| Maximum Investment Amount | INR 15 lakhs |
| Interest Rate | 7.4% |
| Tenure | 10 years |
| Liquidity | Moderate |
Fixed Deposits
Bank Fixed Deposits are considered to be much secured and one of the most preferred choices of Indians. FDs will give you fixed returns and are completely risk-free. You could choose to receive your interest monthly, quarterly, annually, or receive the cumulative interest at the time of maturity. The interest rate earned shall be added to your annual income and is taxable as per your income tax slab. These also work great as the best investment plans for monthly income.
| Minimum Investment Amount | INR 1000 (varies depending on the bank) |
| Maximum Investment Amount | No limit |
| Interest Rate | 5% to 8% (depends on the bank) |
| Tenure | Flexible |
| Liquidity | High |
Recurring Deposits
Recurring Deposits are just like Fixed Deposits except that these require small periodic installments instead of a lump-sum payment. The returns here are fixed and so there is no risk involved. People who can’t afford a huge investment but want to set aside some money every month and make it grow can definitely consider this short term investment option.
| Minimum Investment Amount | INR 100 (for PSBs) |
| Maximum Investment Amount | INR 1 lakh per month |
| Interest Rate | 7% |
| Tenure | 6 months |
| Liquidity | Low |
Gold ETF
Gold Exchange Traded Funds (Gold ETFs) are instruments that are basically a combination of stock and gold investments. These are traded on the National Stock Exchange (NSE) and you can buy and sell these just like other company stocks. Such gold investment plans are passive investments and vary as per the gold prices and hence, these are transparent when it comes to prices. They provide high returns and investors with a low-risk appetite should consider this option.
| Minimum Investment Amount | INR 500 (via SIP), INR 5,000 (via lump sum) |
| Interest Rate | Market-linked |
| Tenure | NA |
| Liquidity | High |
Real Estate
Real Estate is currently one of the fastest-growing sectors in India. This sector holds great potential in fields like housing, manufacturing, retail, hospitality, etc. These are safe investments that bring you high returns. But, sometimes, it might be difficult to sell a property quickly, and hence, the liquidity is a bit low here.
| Minimum Investment Amount | INR 50,000 |
| Interest Rate | 10% to 15% |
| Tenure | NA |
| Liquidity | Low to moderate |
Sukanya Samriddhi Yojana
Sukanya Samriddhi Yojana is a brand new plan launched to secure the future of your girl child. This plan has gained huge popularity as one of the best investment plans for the girl child, in India. Since it is a government-backed investment option, this scheme will provide safe and guaranteed returns and there are zero risks involved. The current interest rate offered by this scheme is 7.6% p.a. Sukanya Samriddhi Yojana Scheme also falls under the category of EEE investment. Hence, the premiums paid toward this child investment plan and the interest earned on the same are exempted from taxes.
| Minimum Investment Amount | INR 250 |
| Maximum Investment Amount | INR 1.5 lakhs |
| Interest Rate | 7.6% |
| Tenure | 15 yrs |
| Liquidity | Low |
Post-Office Monthly Income Scheme (POMIS)
The monthly savings scheme of Indian Post Offices is one of the best post office investment plans you could have to get monthly income. This scheme is backed by the Govt. of India and it requires you to save a certain amount every month. The maturity period of this scheme is 5 years and you can open it with just INR 1,500.
| Minimum Investment Amount | INR 1,500 |
| Interest Rate | 7.7% |
| Tenure | 5 years |
| Liquidity | Minimal to low |
| Tax Exemption | No tax rebate |
2. Medium-Risk Investment Plans:
These are for investors with a medium level of risk. However, medium-risk investments provide you with comparatively higher returns than fixed-return instruments. Medium-risk investments include the following:
a) Debt Funds
b) Balanced Mutual Funds
c) Index Funds
d) Arbitrage Funds
These investments have irregular earnings, and so receiving regular fixed income is not possible.
3. High-Risk Investment Plans:
These plans are for people with a high-risk tolerance and who focus on long-term capital growth. If you are an investor with a high-risk appetite, then the following plans are for you:
a) Equity Mutual Funds
Equity mutual funds are market-linked securities and these invest 65% of the investment amount in equity stocks. An equity mutual fund can be managed both passively and actively. With an actively traded fund, the returns mostly depend on the fund manager’s ability to create returns.
The returns provided by these funds are generally higher but the risk involved is equally high.
Equity funds can be further categorized into large-cap, small-cap, mid-cap, multi-cap, ELSS, etc. You can avail of these as one-time investment plans or as SIPs.
| Minimum Investment Amount | INR 500 (via SIP) |
| Interest Rate | 10% (approx. for 5 yrs) |
| Tenure | 3 years or more |
| Liquidity | High |
b) Unit Linked Investment Plans (ULIPs)
ULIPs are a type of investment plan where the money you pay as premium is invested in stock markets. Every ULIP invests in a separate fund set. ULIPs have gained popularity in recent years due to the LTCG tax exemption. Besides, the new age ULIPs are available at a relatively lesser cost and provide more flexibility. Hence, these have managed to gain a place in the list of best investment plans in India.
| Minimum Investment Amount | INR 1,500 per month |
| Interest Rate | Depends on the investor’s portfolio |
| Tenure | <= 45 yrs |
| Liquidity | Low |
| Risk | High risk |
| Tax exemption | Eligible for tax deductions under the Section 80C |
c) Direct Equity
Stocks are not quite preferred by new investors. The reason being that you need to be able to analyze the market condition properly and then pick up the right stock. Not all can do that well. But, the good thing is that equity provides you with very high returns when you stay invested in it for the long-term. If you wish to invest in Direct Equity, then a Demat account is highly advised in addition to the 3 in 1 account offered by the bank.
| Minimum Investment Amount | INR 500 (via SIP) |
| Interest Rate | 18% (approx.) |
| Tenure | Flexible |
| Time taken to double investment | 4 years |
| Liquidity | Moderate |
| Risk | High risk |
d) Debt Mutual Funds
If you wish to receive steady returns from your investment, then you need to consider debt mutual funds which are very popular and have become a prominent one among the best investment options in India. These are much less volatile as compared to equity funds, so the risk associated is comparatively less. Also, debt mutual funds invest in securities that provide fixed returns like corporate bonds, government securities, commercial paper, treasury bills, and other such securities. A benefit with mutual funds is that you can always start small via a systematic investment plan where you have to pay small premiums periodically instead of a lump sum.
| Interest Rate | 7% to 9% |
| Tenure | >=3 years |
| Liquidity | High |
| Risk | Low to Moderate |
How to Choose the Best Investment Options: Factors to Consider Before Investing
1. Financial goals
Your financial goal should dictate the type of scheme you should buy. These goals could include anything like marriage, buying a house, car, child’s education, or saving for your future. Based on your goal, you should choose your investment plans.
2. Age
Your age matters as well. If you have just started earning, then you could opt for a ULIP to fund your short-term goals. If you are in your mid-40s and 50s, then you could go for endowment plans and mutual funds. So, your age and financial state will also determine the best investment options for you.
3. Present Expenditure and Savings
If you are someone who spends more and saves less, then it is not quite feasible for you to go for large investments. Also, if your monthly expenses like rent, child’s school fees, food, etc. take up more than half of your money, then your investment premiums should be made minimal.
4. Inflation
You wouldn’t deny when I say that the price you pay for the daily necessities today, is bound to increase in the years to come. Hence, you have to keep, your future expenses which will increase due to inflation, in mind, and invest accordingly. Your wealth should grow enough to support your future needs. So, choose such a plan that will help your capital grow or even become double to support you after your retirement.
5. Emergency needs
You never know what life might bring at your doorstep all of a sudden. You might need to pay off a sudden hospital bill, or some other medical emergency. There could other sudden expenses as well. Suppose, you lose your job all of a sudden, then you must be ready with an emergency fund to support yourself for a few months at least. Hence, you need to plan accordingly and invest to create an emergency fund for sudden financial requirements.
6. Dependent family members
If you have a family, then the number of people in your family, your spouse, and the number of children, dependent parents, and other such dependent family members should also determine your assured investment sum. For example, if you only have a wife and a child, then your investment needs should be lesser than those of someone with dependent parents, siblings, grandparents, etc. So, your investment plans should be as per your family’s needs. You should also take up life insurances to provide coverage for your family in case of your untimely demise. Investment plans to provide for your children’s education, marriage, etc. are also advised.
7. Insurance needs
You must get health insurance for yourself and your family members too to cover their medical needs. The prices in the medical sector are rising by the day and so, it is of utmost importance that you buy medical insurance for each member of your family. It would be better to buy a family health insurance policy rather than buying individual health insurance. Also, you must buy life insurance to get the dual benefit of returns and life coverage. Your children and other dependent members of your family deserve a safe financial future. So, getting a life insurance policy is a must.
You may like to read: Top 10 Health Insurance Plans in India for 2022
Best Investment Plans for 1 year
If you choose to invest for just 1 year, then it’s advisable not to go for equities because they have high market volatility. This is because 1 year is an extremely short term for investments. However, the following are the best investment plans in India for short-term along with the details about them:
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Best Investment Plans for 3 years
Investment tenure of 3 years translates to short-term investment schemes. So, short-term investment schemes are well suited for people who wish to gain higher returns in a matter of a few years. The following are the short-term investment plans for 3 years:
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Best Investment Plans for 5 years
5 years’ investment plans fall under the category of short-term low-risk investment plans. A 5-year investment is more likely to give you higher returns as compared to 3 years or 1-year investment. Given below are some of the top-notch investment plans for 5 years.
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Benefits of Investment Plans
There are several benefits of investment plans. We have explained some of the same below:
1. Protects you and your family
The returns received from your investments can be treated as a second income source. You could also purchase insurance that would provide you both life coverage along with returns. So, in case of anything unfortunate, the insured person’s family will receive the insured sum. Such returns will secure the family’s future in case of an untimely demise of the family’s bread earner.
2. Helps to achieve Financial goals
You should always set a goal for your investments, be it short-term or long-term. Your goal could be anything from a child’s education, marriage, to buying a house, car, or for your retirement.
3. Wealth growth
Investment plans offer you an amazing opportunity to grow and create your wealth. You have to choose the right investment option and invest for a tenure. High returns on investment will allow you to grow your money with time and create a stable financial future for you and your family.
4. Tax Benefits
There are several investment plans available that help you to save a lot on your taxes. Such plans include PPF, ULIP, ELSS Mutual funds, Sukanya Samriddhi Yojana, PPF, etc. Not only do investments help you to accumulate and grow your wealth but they also provide substantial tax benefits under the Income Tax Act.
5. Several Options Available
There are a lot of investment options available in the market. So, the investors have a large range of options to choose from. They get the flexibility to choose plans according to their respective risk appetite, financial objectives, and the tenure they want to invest for. Even if you can’t invest in lump sums, you can always go for Best SIP investment plans.
When should you start investing in Investment Plans?
You should start investing as soon as possible or as soon as you start earning. Your financial goals also have a say in the time you need to start investing. For instance, if you want to buy a house, then you should plan accordingly and set a tentative timeline when you should start investing for the same. Likewise, you need to chalk out a smart investment plan for each of your financial goals.
The earlier you start, the more time you will be able to buy to invest and secure your future. Also, you need to keep in mind that you will receive higher returns on long-term investments.
Why do you need to invest?
The inflation rate is growing by the day and so you cannot meet your financial needs and secure your future via savings only. You need to grow and multiply your savings through investment plans that suit your needs. So, to create a strong financial base for you and your family’s future, you need to invest in the correct investment plan.
Document Required to Buy Investment Plans
The documents you want to buy an investment plan are as follows:
- Income Proof:
For Salaried People:
- Form number 16 for the latest year
- Salary credit of last 3 months via bank statements
- Income tax return for the last 2 years
For Self-Employed People:
- Form number 26 AS
- Income Tax returns of last 2 years (not filed in the same year), in addition to income calculation
- If income computation is not available, then Income Tax returns of 3 years are required (not filed in the same year)
- Profit Loss Account along with CA (Certified Audited) balance sheet for the last 2 years.
- Address Proof:
- Voter ID Card
- Aadhaar Card
- Passport
- National Population Register containing details of address, name, and Aadhaar Number
- Some other document issued by the Central Government
- Age Proof:
- PAN Card
- Aadhaar Card
- Passport
- Municipal Birth Certificate
- Voter ID
- Identity Proof:
- Aadhaar Card
- PAN Card
- Voter ID
- Passport
Conclusion
So, by now you must have clearly understood why it is so important to invest and that too properly. Investments come with several benefits and form a necessary part of life. You need to set several financial objectives for your life and act accordingly. Saving and investing as early as possible to fulfill all your needs and secure your loved ones’ futures is an unavoidable priority. And through this article, we have tried to portray our thoughts and opinions on the top investment plans to invest in 2022.
FAQs About Investment option in India 2022
- Which investment plans are ideal for a beginner?
Ans. The following investment plans are ideal for a beginner investor: Mutual funds with low premiums, real estate, fixed deposits, employer retirement plan, and so on. Also, research well about the investment plans before investing and try going for the small investment plans first since you are a beginner.
- How can I receive higher investment returns?
Ans. The investment plans that provide high-interest returns are as follows: Direct Equity, Equity Funds: Small and Mid-Cap Plans, Real Estate, Equity Linked Savings Scheme, and so on.
- How can I check my Provident Fund (PF) balance?
Ans. To check your Provident Fund (PF) balance, please follow the steps given below:
- You need to visit the EPFO portal.
- Then, you need to create an active Universal Account Number (UAN).
- If you have an active UAN, then you need to visit https://passbook.epfindia.gov.in/MemberPassBook/Login.jsp and
- Enter the UAN and your password. You will be able to view and download your EPF account statement.
- How can I grow my wealth fast using investments?
Ans. The following ways will explain how to grow or double your investments faster using investment plans:
Earning Money Slowly or in the Classic Method: In this method, your money is invested in a solid portfolio and doesn’t involve any speculations.
The Safe Method: Bonds is one of the safest investment methods.
The Contrarian Method: In this method, you purchase funds when others are getting out of their investment plans.
The Speculative method: This method includes stock market investments.
- How do I double my investment fast?
Ans: You can double your investment in 5 years via the following plans: Kisan Vikas Patra, Tax-Free Bonds, Non-Convertible Debentures, Corporate Deposits, Bank Fixed Deposits, National Savings Certificate, Mutual Funds, Stock Market, Gold EFTs, and Public Provident Funds.
- Which investment plans are safe?
Ans. The investment plans with low risk are considered to be safe. The following are some of the safe investment options in India:
- Bank Savings Account
- Money Market Funds
- Corporate Bonds
- Reward Checking Accounts
- Public Provident Fund
- National Pension Scheme
- Bank Fixed Deposits
- Real Estate
- Senior Citizen Savings Scheme, etc.
- Is gold a good investment plan?
Ans. Gold is not quite as safe as an investment option. But, gold is indeed a way of storing wealth, still, you should not consider it as the only investment option. There are better investment plans out there.
- How should I start investing early?
Ans. You should start investing in your 20s only when you don’t have much responsibility on your shoulders. This way you will be able to invest a large part of your salary. You should start investing to build an emergency fund, an employer’s retirement plan, etc.
- How much money should I have to retire at the age of 55?
Ans. If you want to retire at the age of 55, then you need to have at least 18 times your present annual income in store. This is mainly due to inflation and this way you will be able to lead your retirement life in the same way as you are leading it now, without compromising a bit.
- What are The Different Types of Fixed Deposit?
Ans. There are 5 different types of FDs available in the market:
- Tax-Saving fixed deposits
- Senior Citizen fixed deposits
- Fixed deposits for NRIs
- Cumulative Fixed Deposits
- Non-cumulative fixed deposits
- Are Fixed Deposits better than Recurring Deposits?
Ans. In FDs, you invest a certain amount of money for a tenure of some months or years. While in RD you need to make periodic deposits for the entire tenure of the investment. FDs are better in the sense that they are one of the best lump sum investment options. It is also a good option if you want periodic cash flow from its returns as you can opt for monthly or quarterly interest payout. You could also choose to receive the entire interest at the time of maturity. On the other hand, if you want to set aside small amounts in a periodic fashion, then go for RDs.
- Should you invest in a Public Provident Fund rather than making a Fixed Deposit?
PPF and FD both are good in their own ways. You need to look at a few features of the two investment options and decide which one suits you better. The rate of interest of FD is 6% to 8% p.a. and depends on the bank. The interest rate of PPF is fixed at 7.9% p.a. The tenure of PPF is 15 years but you can decide the tenure of FD and it could be set to even a few months as well. FDs generally do not have an investment limit but PPFs have a limit of INR 1.5 lakhs per year.
- Is Life Insurance better than Fixed Deposits?
Ans. Fixed Deposits are suited for short-term investments with a tenure ranging from 12 to 60 months. But, you can stay invested for longer to reap higher returns. Insurance has a fixed term of maybe 10 years to a lifetime. The minimum lock-in period varies from one plan to another in the case of life insurances. FD is a good option to save for your future. On the other hand, life insurance provides life coverage in addition to returns. So, both are good and necessary investment options.
- Does saving and investing mean the same thing?
Ans. A savings account is basically a bank account where you can store your money and gain some interest. Such accounts involve no risk at all. So, saving simply means putting away some amount, not spending it, and storing it for future needs. Also, you could withdraw money whenever you wish to.
Investment, on the other hand, means to put in some amount of money in a scheme. You could pay the investment premiums in a periodic manner or a lump-sum payment. Investment plans are mainly meant to grow your wealth over the long-term. Some plans have high risk associated while some have low risk associated. These provide higher returns when compared to a simple bank savings account. But, these might have a lock-in period.
- What is the eligibility and interest rate Sukanya Samriddhi Yojana (SSY)?
Ans. SSY is undoubtedly one of the best investment plans for children and has gained much popularity for the same. The eligibility criteria for opening a Sukanya Samriddhi Yojana are as follows:
- An SSY account can be opened for a girl child only.
- The girl child should be at most 10 years old at the time of account opening.
- You can open the account on behalf of the girl child if you are her parent or legal guardian.
- A parent or legal guardian can open one account for a girl child.
The interest rate offered by Sukanya Samriddhi Yojana is 8.5% p.a.
- What are the best investment plans for Senior Citizens?
Ans. Some of the best investment plans for Senior Citizens are as follows:
National Pension Scheme (NPS)
Public Provident Fund (PPF)
Senior Citizen Savings Scheme (SCSS)
- How to purchase investment plans online?
Ans. Follow the steps given below to buy investment plans online:
- Visit the website of the investment plan you want to purchase.
- Register yourself and enter your basic information such as income, DOB, and so on.
- Enter the plan tenure and your investment amount. Then, click on Search.
- You will get a listing of all the suitable plans.
- Go through the list carefully, and check out the features, benefits, terms, and conditions as well.
- Choose the plan that suits your needs best. Purchase the plan.
- You will need to upload some documents and enter some details.
- Then you’ll have to make the payment for the investment plan and soon you’ll receive a confirmation mail or text.
